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““Non-Typical” Economic, Non-Typical” Economic, Environmental, and Other Environmental, and Other
Flood Risk Management Flood Risk Management BenefitsBenefits
What are non-typical FRM benefits?What are non-typical FRM benefits?
Evacuation-Transition-ReoccupationEvacuation-Transition-Reoccupation Increased Living ExpensesIncreased Living Expenses Health Costs Health Costs Traffic DiversionsTraffic Diversions Emergency ResponseEmergency Response Public AssistancePublic Assistance Environmental DamageEnvironmental Damage
What are underutilized FRM What are underutilized FRM benefits?benefits?
Emergency Response (Search and Rescue)Emergency Response (Search and Rescue) Clean Up (Debris Removal)Clean Up (Debris Removal) Administrative (SBA Loans, Other Agencies)Administrative (SBA Loans, Other Agencies) Damages to Roads and Public WorksDamages to Roads and Public Works Damages to UtilitiesDamages to Utilities
What are the potential value of and What are the potential value of and underutilized non-typical FRM underutilized non-typical FRM
benefits?benefits?
THESE BENEFITS CAN REPRESENT AS THESE BENEFITS CAN REPRESENT AS MUCH AS 25% TO 35% OF THE BENEFIT MUCH AS 25% TO 35% OF THE BENEFIT BASE ON A TYPICAL FRM PROJECTBASE ON A TYPICAL FRM PROJECT
But they can be very difficult to quantify, But they can be very difficult to quantify, difficult to model and differentiate between difficult to model and differentiate between alternativesalternatives
Hard to make site specific without recent Hard to make site specific without recent verified data from historical eventsverified data from historical events
Expert Elicitation – Non-Expert Elicitation – Non-Typical Damage CategoriesTypical Damage Categories
In instances where it may be too time consuming In instances where it may be too time consuming or expensive to collect essential historical data, or expensive to collect essential historical data, EE can be used as a substituteEE can be used as a substitute
Specific pre-determined Questions are directed to Specific pre-determined Questions are directed to subject matter experts for various damage subject matter experts for various damage scenariosscenarios
Their responses are used to populate algorithm to Their responses are used to populate algorithm to estimate damagesestimate damages
ARCF Non-typical NED Categories for EE
Preliminary EE ResultsPreliminary EE Results
Environmental BenefitsEnvironmental Benefits
Flooding is natural; flood damage reduction is not
Flood damage reduction measures can have environmental consequences
Some are intended, some are not
Some are anticipated, some are not
Some are beneficial, some are adverse
Unanticipated, unintended consequences may be the worst type
USACE Environmental USACE Environmental Operating Principles Operating Principles (condensed version)(condensed version)
1. Strive to achieve Environmental Sustainability. 2. Recognize the interdependence of life and the physical
environment. 3. Seek balance and synergy among human development activities
and natural systems. 4. Continue to accept corporate responsibility and accountability. 5. Seek ways and means to assess and mitigate cumulative impacts. 6. Build and share an integrated scientific, economic & social
knowledge base. 7. Respect the views of individuals and groups interested in Corps
activities; listen to them actively and learn from their perspective.
See ER 200-1-5 for implementation policy guidanceSee ER 200-1-5 for implementation policy guidance
Three Reasons for PrinciplesThree Reasons for Principles
1. To create unity of purpose within the Corps when dealing with environmental issues
2. To reflect a new tone and direction for dialogue on environmental matters
3. To ensure that conservation, environmental preservation and restoration are considered in all Corps activities at same level as economic issues
Environmental Restoration
has been a successional process
Flood Risk Management
Flood Damage Reduction with Increasing Environmental Awareness, FWCA; CWA; NEPA; ESA
Ecosystem Restoration made a Stand Alone Mission, WRDA 86 §1135; WRDA 90 §303; WRDA 96 §206
Integrated Flood Risk Management and Ecosystem Restoration Purposes, WRDA 99 §212
Flood Damage Reduction Mission without Environmental Concern
Finding
Environmental
Opportunities
is not a
New Concept
AKA:
1. Good Environmental Design
2. Impact Avoidance
3. Impact Minimization
4. Mitigation
5. The Environmental Alternative
We have delayed or walked away
from many good projects that were
economically marginal by not
claiming environmental
improvements as benefits for non-
structural and structural projects
Breakthrough !!Recognition that Environment
has non-monetary value
Projects can be justified on non-monetary values WRDA 86 §1135
butyou must show significant
Flood Damage Reduction and
Ecosystem Improvement
Dual Purpose Projects may be justified using a combination
of traditional economics
andnon-traditional ecosystem
values
SCRB Method
Separable Cost-Remaining Benefits (SCRB)
Adopted by interagency agreement March 1954 as preferred method
ER 1105-2-100 reaffirmed its preferred status
SCRB Definitions
Cost Allocation is the process of equitably distributing project costs among project purposes.
Separable costs - costs incurred specifically to add a purpose to a project
Joint costs - the difference between the total project costs and the sum of all separable costs
Formulation Requirements for SCRB Allocation
Cost allocation requires formulation of specific plans:
Multipurpose plan
Multipurpose plans less each purpose
Most likely alternative single purpose plan
Allocation Equity
Use of the SCRB method results in the following maximum and minimum cost limits for each purpose
Maximum:
Benefits to each purpose
Cost of the least cost alternative for each purpose.
Minimum: separable costs
Most likely: proportional sharing of joint costs of multipurpose added to minimum
Major Key Points
You know all there is to know
The allocation method is relatively straight forward – Those who benefit pay
Problems relate to the inputs that are required
Ecosystem Restoration Example
To determine alternative project cost for ecosystem restoration purposes:
Determine the cost of the next most efficient plan producing the same ecosystem output and meeting the planning objectives
If the plan formulation is done correctly, the cost of the ecosystem restoration portion of the multipurpose plan represents a more efficient investment. If not, reformulate.
SCRB Example
The Project – Flood Damage Reduction and Ecosystem Restoration
Total Cost Dual-purpose Project = $7,000
Cost without Ecosystem Restoration = $2,930
Cost without Flood Damage Reduction = $5,350
Flood Damage Reduction Benefits = $1,930
Ecosystem Benefits = Non-monetary
Flood Damage Reduction - Ecosystem Restoration SCRB Example
Flood Damage Reduction
Ecosystem Restoration Total
Average Annual Benefits 1,930 Non-monetary 1,930 + Non-monetary
Single Purpose Alternative Cost 2,930 5,350 8,280
Limited Benefits/Costs 1,930 5,350 7,280
Separable Costs 1,650 5,070 6,720
Remaining Benefits 280 280 560
Percent of Total 50% 50% 100%
Joint Costs - - 280
Allocated joint cost 140 140 -
Total allocation 7,0001,790 5,210
Other Social EffectsOther Social Effects(from IPET Report)(from IPET Report)
DrowningDrowning InfectionInfection HomicideHomicide SuicideSuicide AccidentsAccidents InjuryInjury IllnessIllness FraudFraud
Other Social Effects (OSE) AccountOther Social Effects (OSE) Account
Community’s Resiliency & Social VulnerabilityCommunity’s Resiliency & Social Vulnerability Environmental JusticeEnvironmental Justice Quality of Life IndicatorsQuality of Life Indicators
Solid academic literatureSolid academic literature Widely usedWidely used Recommended by GAORecommended by GAO
ModelsModels Hedonic ModelsHedonic Models Loss of Life Estimation Loss of Life Estimation
Regional Economic Development (RED)Regional Economic Development (RED)
Typically regional economic impacts of a project can be Typically regional economic impacts of a project can be classified into one of three categories:classified into one of three categories:
Direct effectsDirect effects which represent the initial change of the new which represent the initial change of the new expenditure stream on industries in direct support of the new expenditure stream on industries in direct support of the new project. These ‘direct’ industries will require support.project. These ‘direct’ industries will require support.
Indirect effectsIndirect effects are changes in inter-industry transactions as are changes in inter-industry transactions as supplying industries respond to new demands placed on supplying industries respond to new demands placed on them by ‘direct’ industries. them by ‘direct’ industries.
Induced effectsInduced effects are changes in consumer spending patterns are changes in consumer spending patterns caused by increases in employment and income as ‘direct’ caused by increases in employment and income as ‘direct’ and ‘indirect’ industries increase their employment.and ‘indirect’ industries increase their employment.
Evaluating REDEvaluating RED
Construction impacts in project area Construction impacts in project area – Creates direct, indirect and induced – Creates direct, indirect and induced jobs for local economy (why not NED jobs for local economy (why not NED – Transfers)– Transfers)
Non-NED Flood damage reduction- Non-NED Flood damage reduction- interruption of activities due to floodinterruption of activities due to flood
Portfolio ManagementPortfolio Management
““Why is this an important project?”Why is this an important project?” ““Why is this project more important than Why is this project more important than
other projects?” other projects?” In addition to whether a project delivers In addition to whether a project delivers
high priority outputs & successfully high priority outputs & successfully meets established budget criteria meets established budget criteria
RED and OSE accounts could help answer RED and OSE accounts could help answer “why important?”“why important?” Ex: saves “x” lives, keeps local Ex: saves “x” lives, keeps local
economy viable economy viable
Measurement challenges – Measurement challenges – that we will need to think that we will need to think
throughthrough Can OSE and RED be qualitative or Can OSE and RED be qualitative or
quantitative?quantitative? Technical challenges in measuring themTechnical challenges in measuring them Need to measure for existing Need to measure for existing
conditions, future w/ and w/o project conditions, future w/ and w/o project conditions conditions
In addition to the difference between w/ In addition to the difference between w/ and w/o project conditions, can we and w/o project conditions, can we distinguish between alternatives?distinguish between alternatives?
Significance of effect influences need to Significance of effect influences need to measure quantitativelymeasure quantitatively